Asymmetric Information, Tax Evasion and Alternative Instruments of Government Revenue
Using a pure-exchange overlapping generations model, characterized with tax evasion and information asymmetry between the government (the social planner) and the financial intermediaries, the author discusses the optimal tax and seigniorage plans, derived from the welfare maximizing objective of the social planner. It is observed that irrespective of whether the economy is characterized by tax evasion or asymmetric information, a benevolent social planner maximizing welfare and simultaneously financing the budget constraint, should optimally rely on explicit, rather than implicit taxation.
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Volume (Year): IV (2006)
Issue (Month): 1 (February)
Pages: 75 - 89
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References listed on IDEAS
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- Friedrich Schneider & Robert Klinglmair, 2004.
"Shadow Economies around the World: What Do We Know?,"
CESifo Working Paper Series
1167, CESifo Group Munich.
- Friedrich Schneider & Robert Klinglmair, 2004. "Shadow economies around the world: what do we know?," Economics working papers 2004-03, Department of Economics, Johannes Kepler University Linz, Austria.
- Schneider, Friedrich & Klinglmair, Robert, 2004. "Shadow Economies around the World: What Do We Know?," IZA Discussion Papers 1043, Institute for the Study of Labor (IZA).
- Friedrich Schneider & Robert Klinglmair, 2004. "Shadow Economies Around the World: What Do We Know?," CREMA Working Paper Series 2004-03, Center for Research in Economics, Management and the Arts (CREMA).
- Stiglitz, Joseph E & Weiss, Andrew, 1981. "Credit Rationing in Markets with Imperfect Information," American Economic Review, American Economic Association, vol. 71(3), pages 393-410, June.
- Giovannini, Alberto & de Melo, Martha, 1993. "Government Revenue from Financial Repression," American Economic Review, American Economic Association, vol. 83(4), pages 953-63, September.
- Gray, Jo Anna & Wu, Ying, 1995. "On equilibrium credit rationing and interest rates," Journal of Macroeconomics, Elsevier, vol. 17(3), pages 405-420.
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